Yesterday, a few entry signals were generated. Let's look at the 5-minute chart to get a picture of what happened. Previously, I considered entering the market from the level of 1.0822. A false breakout and downside retest of this mark produced a sell signal, bringing a profit of some 25 pips. After a false breakout and consolidation above 1.0862 in the second half of the day, another sell entry point was created, which resulted in an increase of 90 pips.
When to open long positions on EUR/USD:
Although the euro surged after the ECB's rate decision, Christine Lagarde's press conference, where she hinted at the possibility of more rate increases, became the main driving force for the pair. The eurozone will see the release of inflation data for May. Those figures will be of crucial importance to traders as the ECB president focused primarily on them at a press conference yesterday.
If data exceeds market expectations, the euro will feel some pressure. Therefore, I will buy cautiously at current levels. I will open long positions at around 1.0932 support after a false breakout, targeting 1.0976. A breakout and a downside test of this range will boost demand for the euro. The resistance level of 1.1002 will stand as the target. The most distant target is seen at 1.10289 where I will lock in profit.
If EUR/USD goes down and there are no bulls at 1.0932, bearish activity may increase. A buy signal will be generated by a false breakout at around 1.0898 support. I will open long positions on a rebound from a low of 1.0862, allowing a correction of 30-35 pips intraday.
When to open short positions on EUR/USD:
There are no selling opportunities today. The bears may only count on a decrease in inflationary pressures today. I will act only if the price rises and a false breakout occurs at around 1.0976 resistance, where the pair is heading now. If it fails to consolidate, a sell signal will be made, able to push EUR/USD to 1.0932 support. Consolidation below this level and its upside retest will lead to a rise in value to 1.0898. This mark is in line with the bullish moving averages. The most distant target is seen at a low of 1.0862 where I will lock in profits.
If EUR/USD strengthens during the European session and there are no bears at 1.0976, the uptrend will continue. I will sell the instrument after failed consolidation at 1.1002 resistance. I will also sell on a bounce off a high of 1.1029, allowing a bearish correction of 30-35 pips.
Commitments of Traders:
The COT report for June 6 revealed a fall in long positions and a slight increase in short positions. The decision of the Federal Reserve on interest rates this week can significantly change the situation in the market. If the Federal Reserve decides to pause hiking rates, the euro will gain significantly while the US dollar will weaken. With an aggressive European Central Bank and despite the signs of a slowdown in underlying inflationary pressures, risk assets will likely continue strengthening against the US dollar. According to the COT report, non-commercial long positions decreased by 5,757 to 236,060, while non-commercial short positions increased by 1,457 to 77,060. The overall non-commercial net position dropped to 158,224 from 163,054. The weekly closing price fell to 1.0702 from 1.0732.
Indicator signals:
Moving averages:
Trading is carried out above the 30-day and 50-day moving averages, which indicates a bullish continuation.
Note: The author considers the period and prices of moving averages on the H1 (1-hour) chart that differ from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
Support stands at 1.0862, in line with the lower band.
Indicator description:
Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.
Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.Bollinger Bands. Period 20Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements.Long non-commercial positions are the total long position of non-commercial traders.Non-commercial short positions are the total short position of non-commercial traders.Total non-commercial net position is the difference between the short and long positions of non-commercial traders.